Suppose ATC (Q=500) = $300 per unit & ATC(Q=501) = $301 per unit, where Q denotes output level, ATC is average total cost & ATC(Q) gives the average total cost at output level Q. Currently Q 500. A new customer wants to buy a unit and offers you to pay $750 to produce the extra unit. Should you accept the offer? Explain you answer.

Suppose ATC (Q=500) = $300 per unit & ATC(Q=501) = $301 per unit, where Q denotes output level, ATC is average total cost & ATC(Q) gives the average total cost at output level Q. Currently Q 500. A new customer wants to buy a unit and offers you to pay $750 to produce the extra unit. Should you accept the offer? Explain you answer.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 9SQP

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(a) Find the marginal cost function C'(x). C'(x) Use it to estimate how fast the cost is increasing when x = 60,000. | per game system Compare this with the exact cost of producing the 60,001st game system. The cost is increasing at the rate of $ | game system is $| the estimated cost of producing the 60,001st game system found using the marginal cost function. | per game system. The exact cost of producing the 60,001st J. The actual cost of producing the 60,001st game system is --Select-- (b) Find the average cost function C(x) and the average cost to produce the first 60,000 game systems. (Round your answer to the nearest cent.) C(x) C(60,000) - $ (c) Using your answers to parts (a) and (b), determine whether the average cost is rising or falling at a production level of 60,000 game systems.
Suppose you have a job in production manageent. A portion of your costs are as in the table below: Quantity 300 Average Total Cost JD 250 301 JD 251 Your current level of production is 300 units. All 300 units have been ordered by your regular customers. The phone rings. It's a new customer who wants to buy one unit of your product, offering JD 650 for the unit. You would have to increase production to 501 unit. Should you do it? * a Yes i should increase production to 501 unit and earn more profit. O No i shouidn't increase production to 501 unit because i will loose.